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Mongolia Fund to Manage $30 Billion Mining Jackpot

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Bloomberg reports, “The Mongolian government will set up a sovereign wealth fund using mining royalties and tax revenue, and distribute part of the income to citizens to alleviate poverty, said Finance Minister Sangajav Bayartsogt. The fund, to be run by professional managers from 2013, will disburse part of its annual income to every Mongolian in cash or non-cash securities to let them own stakes in the country’s mining wealth, Bayartsogt said. Initial capital will be drawn from Ivanhoe Mines Ltd.’s $4 billion Oyu Tolgoi copper- gold mine project, estimated to generate $30 billion in tax revenue over 50 years, he said.

‘We’re drafting the idea to implement the proposal, and we’re studying examples like the Alaskan Permanent Fund,’ Bayartsogt said in a Sept. 9 interview in the capital Ulaanbaatar, declining to specify the size of the proposed fund.

Mongolia, whose 2.7 million citizens depend on mining and agriculture for half the nation’s 2008 economic output, is banking on Oyu Tolgoi and about 6,000 other mineral deposit sites to lift average annual income, which at $1,680 per person last year was ranked 151st in the world by the World Bank.

‘If the government can pull this off, we can expect lasting stability and growth in Mongolia, because this fund can help stabilize the economy and help fend off the boom and burst of the commodity-price cycles,’ said Erdenedalai Choinkhor, an analyst at Frontier Securities Co. in Ulaanbaatar. The $40 billion Alaska Permanent Fund, created in 1976 with state revenue from oil production, has constitutionally protected capital that can’t be spent. Most of its earnings are reinvested, and a dividend is returned each year to eligible Alaskans. The fund reported a $6.3 million loss in 2001 after buying 685,600 shares in Enron Corp. Norway’s sovereign wealth fund, the 2.47 trillion-krone ($410 billion) Government Pension Fund – Global, derives money from taxes on oil and gas and ownership of petroleum fields. The oil and gas money is invested abroad to avoid stoking domestic inflation.

Mongolia also wants to diversify the economy’s reliance on animal husbandry and mining to avoid the so-called Dutch Disease, where a commodity boom sucks in foreign exchange, raises the currency’s value and makes manufacturing less competitive.”

read more: Bloomberg

HFF Finds a New Home in Jones Lang LaSalle

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Jones Lang LaSalle Incorporated (JLL) inked a deal to acquire Dallas-based HFF, Inc. JLL will acquire all the outstanding shares of HFF in a cash and stock transaction with an equity value of approximately US$ 2 billion. The transaction has been unanimously approved by the boards of directors of both companies. Mark Gibson, CEO of HFF, will join JLL as CEO, Capital Markets, Americas and Co-Chair of its Global Capital Markets Board. The transaction is expected to close in the third quarter of 2019, subject to HFF shareholder approval and customary closing conditions, including regulatory review.

Transaction Details

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IFM, Polish Development Fund, PSA Acquire Gdansk Terminal

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The Polish Development Fund, known locally as Polski Fundusz Rozwoju S.A. (PFR), signed a deal to lead an investor group to acquire the largest container terminal in Gdansk from an infrastructure fund managed by Macquarie. The transaction is worth more than 5 billion zlotys (US$ 1.3 billion). DCT Gdansk is the only terminal in Baltic sea region that can serve Ultra Large Container Vessels, also known as UCLVs.

The Polish Development Fund and IFM Investors will each acquire a 30% stake in the Gdansk terminal, while PSA International Pte Ltd (which is owned by Temasek Holdings), will own 40% of the terminal.

Macquarie was advised by Goldman Sachs.

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Williams and CPPIB Create $3.8 Billion Venture in the Marcellus and Utica Basins

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Tulsa-based Williams Companies Inc. (Williams) disclosed a series of transactions that will establish a new platform for the optimization of its midstream operations in the western Marcellus and Utica basins through a long-term partnership with Canada Pension Plan Investment Board (CPPIB). This deal gives CPPIB more exposure to the North American natural gas market.

CPPIB Investment

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